New Delhi, Feb 27:
Coining a new abbreviation, JAM, for the trinity of solutions to target subsidies better, India’s Economic Survey says the Jan Dhan Yojana, Aadhaar cards and the mobile phone have the potential to “wipe every tear from every eye” with direct transfer of doles.
Even though the Jan Dhan Yojaya and the issuance of Aadhaar cards were schemes of the previous United Progressive Alliance (UPA) government, albeit with different sets of targets, the survey makes a case for capitalising on it with a common nomenclature “JAM Number Trinity Solution”.
The survey, tabled by Finance Minister Arun Jaitley in the Lok Sabha Friday, devotes an entire chapter to this initiative entitled: “Wiping Every Tear From Every Eye: The JAM number Trinity Solution”.
“The heady prospect for the Indian economy is that with strong investments in state capacity, that nirvana today seems within reach.”
The survey says price subsidies are often regressive which benefit rich more than the poor. It also endorses the views expressed by the previous UPA government, saying the direct transfers of cash through these schemes will help the poor in better manner.
“The debate is not about whether but how best to provide active government support to the poor and vulnerable. Cash-based transfers based on JAM number trinity – Jan Dhan, Aadhaar, mobile — offer exciting possibilities to effectively target public resources to those who need it most.”
It says the success in this area will allow the determining of prices of various commodities to be liberated to perform their role of efficiently allocating resources and boosting long-run growth, as poverty remains India’s most pressing problem even 68 years after independence.
The survey makes some interesting observations on how subsidies do not benefit the poor much:
– Bottom 80 percent of households constitute only 28.1 percent of total rail passengers
– Bottom 50 percent of households consume 25 percent of subsidised cooking gas
– Leakage accounts for 41 percent of subsidised kerosene with only 46 percent for poor families
– Fertiliser firms derive most benefit from subsidies as farmers’ demand is price-determined
– Leakage eats away 54 percent of subsidised wheat, sugar and only half of what remains is left for the poor.
– Most water subsidies are allocated to private taps but 60 percent of poor access public taps.
The survey says India had already extended Adhaar cards to 720 million people and that the number was set to exceed 1 billion. This apart, the government has said that Jan Dhan Yojana that calls for a bank account for every household now has universal coverage.
“With the introduction of Jan Dhan Yojana, the number of bank accounts is expected to increase further and offering greater opportunities to target and transfer financial resources to the poor,” the survey said.
As regards mobile phone, the survey believes it, too, can be a game-changer.
“With over 900 million cell phone users and close to 600 million unique users, mobile money offers a complementary mechanism of delivering direct benefits to a large proportion of the population. And this number is increasing at a rate of 2.82 million per month,” it said.
“If the JAM Number Trinity can be seamlessly linked, and all subsidies rolled into one or a few monthly transfers, real progress in terms of direct income support to the poor may finally be possible,” it said.
“It will be a nirvana for two reasons: Poor will be protected and provided for and many prices in India will be liberated to perform their role of efficiently allocating resources in the economy and boosting long run growth.” IANS